173PS1W07

173PS1W07 - Economics 173 Corporate Finance Prof. Garey...

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Economics 173 – Corporate Finance Winter 2006-07 Prof. Garey Ramey Problem Set 1 Problem 1.1. Calculate the PVs of the following cash flows at the given discount rates: a. $80,000 received at the end of year 6, discount rate 11%. b. $120,000 received at the end of year 15, discount rate 4%. c. $40,000 received at the end of year 2, discount rate 6%. Problem 1.2. Calculate the PVs of the following annuities at the given discount rates: a. $20,000 received at the end of years 1 through 15, discount rate 5%. b. $100,000 received at the end of years 1 through 4, discount rate 15%. c. $65,000 received now and at the end of years 1 through 20, discount rate 6%. Problem 1.3. Calculate the PVs of the following cash flow sequences at the given discount rates: a. $14,000 per year starting at the end of the current year, continuing in perpetuity, discount rate 12%. b. $60,000 at the end of the current year, followed by cash flows at the end of every future year that rise by 2% per year, discount rate 7%. c.
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173PS1W07 - Economics 173 Corporate Finance Prof. Garey...

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